Method for integrated supply chain and financial management

Abstract

A method to generate a strategic business plan to improve operations, and to closely monitor various performance measures of an enterprise. This is accomplished employing a more comprehensive approach to maximizing profitability, increasing revenue, and explicitly considering risk. In particular, the method extends supply chain management using financial management considerations, extends financial management using supply chain management considerations, employs supply chain management techniques to improve financial management, and employs financial management techniques to improve supply chain management. The method uses information and models derived from at least one of the following business processes: accounting; cash management; funds management, financing, profitability analysis, risk management, loan management, treasury management, investments management, business development, order management, demand planning and forecasting, procurement, production planning, inventory management, transportation and distribution, and supply chain design.

Description

1. Field of the InventionThe present invention generally relates to a method to assist senior management decision-making, and to closely monitor various performance measures of an entire enterprise. Specifically, the method relates to extending Supply Chain Management (SCM) using Financial Management (FM) considerations, as well as extending FM using SCM considerations. This is accomplished by employing a more comprehensive approach to maximizing profitability, and increasing revenue, and explicitly considering risk.2. Background DescriptionCurrent methods for supply chain management (SCM) and financial management (FM) practice are incomplete. Supply chain management solutions focus on the goods and information flows, but neglect financial requirements. Financial management solutions focus on financial flows, but do not adequately incorporate supply chain management needs.Businesses require complete solutions that integrate the supply chain and finance functions. Financial managemen...

AI Technical Summary

Problems solved by technology

Supply chain management solutions focus on the goods and information flows, but neglect financial requirements.

Financial management solutions focus on financial flows, but do not adequately incorporate supply chain management needs.

However, the effectiveness of these solutions has been constrained by limited sharing of information, and locally optimized decision-making.

Many academics and practitioners have attempted to bridge the gap between Supply Chain Management and Financial Management, but they have only been partially successful.

These previous methods have failed to use information technology to integrate Supply Chain Management and Financial Management.

They have also failed to exploit significant opportunities to improve financial performances by integrating Supply Chain Management and Financial Management.

However, only sparse integration at the planning level exists, today.

However, a complete integrated solution does not yet exist.

This is due mainly to a legacy problem: many well known and widely used results would have to be revised to support integration.

Furthermore, the mathematical difficulties involved in integration can be non-trivial.

Theoretical linkages between SCM and other fields, such as accounting, corporate finance, international tax law, etc, are not well-established in the academic literature.

The polarization in research is due to the analytical complexities of each modeling approach, i.e. network complexity in the first case and stochastic complexity in the second case.

Consequently, there persists a significant gap in the literature on unified modeling approaches for global manufacturing strategy options under exchange risk."

All of these formulations do not explicitly allow for randomness and dependencies in the cash flows between locations.

However, multi-factor models have performed rather poorly over the period of floating exchange rates.

There are a number of limitations to the approaches as described above.

There are currently no models that effectively integrate SCM and FM.

In particular, none of the models effectively considers the tight coupling of the production decision with cash flow movements, royalty fees, dividend repatriation, etc.

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